Business model more important for revenue than download numbers – Free report “How mHealth app publishers are monetizing their apps”

The majority of mHealth app developers (56%) are still making revenue below the poverty line, but overall, mHealth app developers are getting richer. The number of no-earners and low-earners is diminishing. Our data shows that there are a couple of ways to get out of the “no-earners” group. These are the KPIs to watch: Business model, location and investment in development.

40% of mobile app developers in healthcare are still not making any revenue with their apps. 16% are making revenue, but less than $10,000, which is barely scratching the poverty.

On the other hand, the percentage of no-earners and low-earners is decreasing over time. Within one year the share of app publishers who are making no or less than $10k/revenue per year has decreased by 6%. In addition, on the other end of the spectrum, the group of high earners ($1M or more of revenue per year) has increased by 4%. So overall, the revenue generated with mHealth apps is increasing with less “no/very low earners” and more “high earners”.

These findings are part of our new free report: “mHealth Economics – How mHealth app publishers are monetizing their apps”. The report analyzes the technical aspect of mobile health app development and the question how to monetize mHealth apps. You can download the report for free here.

Digital health is somewhat special with a comparably high group of no-earners. A closer look at this group shows that only part of it actually wants to earn money with mobile apps. The group of “zero revenue” consists of several sub-groups:

– NGOs, hospitals, healthcare professionals. This group’s goal is not necessarily to make money with their apps.

– Developers producing apps for purely altruistic reasons: To help themselves or their loved ones manage their medical condition or health issue.

– Start-ups that haven’t broken even yet. These are the groups that would like to earn money but haven’t managed to do so yet.

Determinants of high revenue

But which KPIs have the biggest impact on the revenue? Downloads? Monthly actives? Conversion funnel? For those app developers who want to make and maximize their app revenues, our data show correlation of the app revenue with three things: The location, the revenue model and the investments in the app development.

– Location: mHealth app companies from North America are able to generate more revenue than their respective counterparts, which can be seen from the structure of the group of high earners ($1M+ revenue / year), where North American companies are represented the most. The US market is on average a couple of years ahead of other regions, not only in terms of revenue, but also market experience, access to venture capital and technical development.

– Business model: There are a variety of different business or revenue models to monetize mobile health apps. The revenue made with each business model varies widely, i.e. not of them generate the same revenue. Device sales is the business model with the highest share of revenue millionaires (23%), whereas “premium content” is the business model with the lowest percentage of revenue millionaires (5%). On average 11% of mHealth app publishers make more than $1M revenue/year with their apps.

The graph above also shows that most health apps today are much more than just an app. They are just the visible tip of an iceberg of much more lying underneath: Some apps are based on a complex underlying service, some on a physical product, some on target-group specific traffic or clicks, some on sponsoring.

– Investment in app development: Nowadays successful app development in healthcare is an investment business. Low investments lead to low success, high investments raise the possibilities of high success. Only 8% of app publishers with a low external development budget (<$25,000) make more than $1M revenue per year. Whereas 28% of app publishers with a high external development budget (>$500,000) make more than $1M revenue per year.

High investment companies also invest more of their external budget into development (and exactly the same percentage of their budget into marketing) – which leads to 8 times higher yearly downloads for “high external budget” companies.

Do you want to know more about developing and monetizing mobile health apps?

– Download numbers of mHealth apps
– Monthly active user numbers
– Best marketing channels for healthcare apps
– Best business model and business model with highest revenues
– Costs for development and marketing for an mHealth apps
– Development time